Home - How to Start a Business in Malaysia
Did you know that Malaysia is the 12th easiest country to do business in? The World Bank says so! With friendly business policies, low capital requirements, and simple legal processes, it's a great place to start your company. But to really succeed in this competitive market, you need to know how to set up a company in Malaysia.
That's where SFM Consulting Firm steps in! We have prepared this article to help you learn the process of starting your own business in Malaysia. So, start reading!
1
In Malaysia, you need to register your sole proprietorship or partnership with the Companies Commission of Malaysia. This registration falls under the Registration of Businesses Act 1956.
2
If you are a foreign investor interested in setting up a company in Malaysia, incorporating a company under the Companies Act 1965 is a common approach.
Company Categories
You can classify companies as either private or public.
Private Company
Public Company
Public companies in Malaysia raise funds from the general public by offering shares for sale.
3
Foreign companies or foreigners setting up a company in Malaysia can choose to operate through a branch office. This is done under the Companies Act 2016. A branch office acts as an extension of the main company.
You can conduct the same business activities in Malaysia as you do in your home country. However, a branch office is not a separate legal entity. This means that the parent company bears full liability for its operations in Malaysia.
Here are the steps of starting a business in Malaysia.
1
StepSearch for a gap in the market. Think about problems that your product or service can solve. Then, talk to potential customers or mentors and ask for their feedback. They can offer valuable insights that can help you develop a solid business idea.
For instance, if you plan to sell handmade products, research if there’s demand for them locally. Use tools like Google Trends and social media to understand what people are looking for in your niche.
2
Step
3
StepHere are some ways to secure funding if you want to start a business in Malaysia.
The interest rates for loans can differ from one bank to another. Typically, these rates range from 4% to 8% per year.
4
Step
5
StepTo operate a business in Malaysia, you need a registered business address. Here’s how to get one:
6
StepIf you want to run a Private Limited Company in Malaysia, you need to hire a company secretary who is licensed by SSM and is based in Malaysia.
The company secretary helps keep your business compliant with legal requirements. Generally, you need to pay between RM 1,000 and RM 2,000 for secretarial services each year.
7
StepNow, you need to choose a name for your business that will represent your brand to customers. Here are the steps to register your business name in Malaysia:
8
StepAfter that, register your business with the Companies Commission of Malaysia (SSM). The process varies by business type:
1
Sole Proprietorship or Partnership
| Sole Proprietorship | Partnership |
|---|---|
| Copy of national identity card. | Copy of passport or MyKad of all partners. |
| Description of business activity and category code | Partnership agreement |
| Proof of business name availability | Proof of business name availability |
| Proof of business address (e.g., rental agreement) | Business Registration Form |
2
Private Limited Company (Sdn. Bhd.)
9
StepYou can follow these steps to open a bank account in Malaysia.
10
StepCheck out this table to find out what licenses and permits you need to start your business in Malaysia.
| Type of Business | Industry-Specific Licenses | Issuing Authority | Applicable Fee (estimated) |
|---|---|---|---|
| Food & Beverage | Health Permit, Halal Certification, Food Handling & Safety License | JAKIM, Ministry of Health, Local Council | Health Permit: RM 50 to RM 200 Halal Certificate: RM 100 to RM 2,500 |
| Retail Business | Retail License, Business Premise License | Local Municipal Council | RM50 to RM300 |
| Export/Import | Import/Export License, Customs License | Royal Malaysian Customs Department | RM100 to RM3,000 |
| Manufacturing | Import/Export License, Customs License | Royal Malaysian Customs Department | RM100 to RM3,000 |
| Manufacturing | Environmental Impact Assessment (EIA), Manufacturing License | Ministry of International Trade & Industry, Department of Environment | RM1,000 to RM5,000 |
| Tourism & Hospitality | Travel Agency License, Tourism License | Arts and Culture, Ministry of Tourism, Tourism Malaysia | Tourism License RM 200 to RM 2,000 |
| Health, Beauty, & Wellness | Beauty License, Health & Safety Certificate | Ministry of Health | RM500 to RM1,500 |
| Education & Training | Accreditation by Ministry of Education (MOE), Educational Institution License | Ministry of Education | RM1,000 to RM10,000 |
| Real Estate | Building Permit, Developer’s License, Property Agent License | Board of Valuers, Appraisers, Estate Agents & Property Managers | Property Agent License: RM200 to RM1,000 |
| Media & Advertising | Advertising Permit, Broadcasting License | Ministry of Communications and Multimedia | RM500 to RM5,000 |
11
StepAfter you have registered a company in Malaysia, you need to register for a tax file number with the Inland Revenue Board. To complete this process, you need to prepare the following documents:
12
StepIf you want to hire employees for your company, you should keep these elements in mind:
Setting up a business in Malaysia as a foreigner is similar to the steps mentioned in the section "how to start a business in Malaysia." However, there are some additional requirements for foreigners.
1
StepIf you are a foreigner, you need to make sure your business idea fits within the industries that are open to foreign investment in Malaysia. Some sectors, like technology, renewable energy, manufacturing, and tourism, allow for 100% foreign ownership. However, if you want to start a business in retail, food and beverage, or other distributive trades, you may need a local partner who holds at least 30% of the equity.
Additional Tip
You should consult the Malaysian Investment Development Authority or the Malaysia Digital Economy Corporation. They can help you confirm if your business idea is eligible.
2
StepForeign entrepreneurs in Malaysia need to meet certain financial requirements to start their businesses. One of the most important requirements is the paid-up capital.
Paid-up capital requirements for foreign-owned companies
You must deposit this capital into your company’s corporate bank account. You will also need to declare this amount during the business registration process.
3
StepAs a foreigner, you can only register your business as a Private Limited Company (Sdn. Bhd.) or a Labuan International Company. You cannot register as a sole proprietorship or a partnership unless you have permanent residency.
4
StepForeign-owned businesses must provide a registered business address in Malaysia. The requirements remain the same as for local businesses.
5
StepAs a foreigner, you need to hire a licensed Malaysian company secretary. This person will perform these tasks:
6
StepYou need to make sure that your business name follows Malaysian regulations. To check if your name is available, use the MyCoID portal. You can also reserve your name through this portal.
7
StepThe registration process is similar for both locals and foreigners. However, as a foreigner, you need to submit some extra documents. Here is a list of the documents required for foreigners:
Once your registration is approved, you will receive your Certificate of Incorporation.
8
StepForeigners need to have the right pass to run a business in Malaysia. Here are the types of passes you might need:
Additional Tip
You need to submit your business proposal to the Malaysian Investment Development Authority for approval. Then, you can apply for your pass through the Expatriate Services Division or the Malaysia Digital Economy Corporation if your business is digital.
9
StepForeigners can open a corporate bank account in Malaysia by following the same process as locals.
10
StepGetting licenses can be tougher for foreign-owned businesses in Malaysia. For example:
11
StepWhen you register for taxes, the process is the same for you as a foreigner and for locals. However, there are a few things you should keep in mind. The corporate tax rate is usually 24%. You also need to think about withholding taxes if you send money abroad. You can hire a tax consultant who understands the rules for foreign businesses in Malaysia.
12
StepIf you have a foreign business and want to hire local workers, you need to follow the labor laws in Malaysia. You will also need to apply for employment passes for your employees.
To qualify for an employment pass, your company must pay a minimum salary of RM5,000. If the company is fully foreign-owned, it must have a paid-up capital of at least RM500,000.
13
StepAfter handling all the necessary regulations, you can launch your company. Before that, you can also:
Additional Tip
In Malaysia, there are agencies like the Malaysian Investment Development Authority and the External Trade Development Corporation that help foreigners set up business in Malaysia. You can expect them to:
Invest in Marketing and Branding
To increase your brand visibility and attract Malaysian customers to your brand, you can do the following:
(BA-Hons, MBA, LL.B, LL.M)
Meet Md. Forhad Hossain – is an expert in company registration with over 14 years of experience. He has helped more than 400 businesses in Malaysia and over 7,000 clients from around the world start their journey successfully.
Forhad is passionate about making business registration simple and stress-free. His knowledge and dedication have earned him the trust of entrepreneurs worldwide.
If you’re looking for someone to guide you, Md. Forhad Hossain is the name you can Rely on.
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To close a business in Malaysia, you need to follow a formal process that includes submitting necessary forms to SSM, settling any outstanding debts, and canceling your business licenses.
The cost of starting a business in Malaysia can vary significantly based on your business type, location, and the specific registration fees. Generally, you might need to spend RM 50,000-RM 100,000 to start a business in Malaysia.
You should register your trademarks, copyrights, and patents with the Intellectual Property Corporation of Malaysia.
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